Global Equities

Journalism's 'fourth estate' role is crumbling in the internet age

The telling blow is the damage wrought on local newspapers.

June 2019

Canadian Prime Minister Justin Trudeau’s embrace of Jody Wilson-Raybould while gazing into her eyes just after she was sworn in as the country’s first Indigenous attorney general in a cabinet that was notably half female epitomised the progressive image that Trudeau’s Liberal government sought to portray on taking charge in 2015.

Four years later, Wilson-Raybould and another female minister have been expelled from the Liberal party. This flowed from Wilson-Raybould’s testimony to parliament that the prime minister’s office bullied her to ensure Quebec-based engineering company SNC-Lavalin avoided criminal charges over bribery allegations and then demoted her when she resisted. A Trudeau aide has stepped down. Trudeau, who denies the charges, has faced calls to resign. His government could fall at elections in October. The catalyst for this turmoil? An exclusive in Canada’s The Globe and Mail newspaper in February.[1]

The article is another of the countless scoops of significance produced by the four-centuries-old business model of privately owned print journalism. Under the model, proprietors used the money gushing from classified ads to fund credible reporting in hallowed newspapers that guided the agenda for lesser print, radio and TV. The print-led swarm held power accountable, created public debate, imparted reliable information, knitted communities and prompted social and legal reforms. The civic role of quality print-dominated media was such a ‘public good’ it was deemed the ‘fourth estate’, a constitutionally unrecognised check on the three-way split of state power in liberal democracies.

Alas, the traditional newspaper model is struggling, possibly crippled. Free news over the internet, speciality news sites, websites that compete with classified ads, the public’s unwillingness to pay for online news, the digital platform’s dominance of digital advertising and the loss of control of content distribution to these platforms have battered newspaper revenue.[2]

As financial pressure mounted, newspapers responded in perhaps the most self-destructive way possible – they prioritised cost-cutting over quality. Management shed reporters and sub-editors (who enforce standards) as they reduced and centralised coverage. As US newsroom employment fell about 45% over the past decade,[3] investigative and rigorous reporting gave way to ‘clickbait’, regurgitated press releases, syndicated copy, opinion pieces, lifestyle coverage and stories on Twitter feuds. Financial woes often led to the erosion of the boundary between editorial and advertising that gave mainstream media its credibility. Subscriptions dropped and more advertisers fled. The result is that across the world, newspapers have closed – about 20% of US newspapers have vanished, mainly local ones, since 2003.[4] Many of the survivors are less-frequently published ‘ghost newspapers’, their websites as vacuous. TV and radio media confront the same fate as advertisers shift to platforms.

The diminishing of quality journalism within newspapers appears unstoppable and nothing appears capable of assuming the fourth-estate role it played. The nature of the internet works against online news sites being such a civic role in multiple ways. One is people consume less news online than in print and as the content is ‘unbundled’ they see less public-interest news.[5] The result is the media becomes less influential. Another is that the internet favours global over local or regional. A third is that web-based articles rotate too much and news over the internet is too fragmented to steer the media agenda. A fourth is the needs of online news sites favour quantity over quality, the now over the thoughtful, rumour over fact. Another is that technology makes it harder to protect sources.[6] A sixth is that misinformation gone viral has discredited all media. A seventh is that scoops of significance go viral too, so they bestow fewer financial benefits – there’s no need to buy the paper. Last, editorial and financial power rest with content distributors, not content creators. The few publications such as The New York Times that are thriving thanks to the web are too little read in any one location outside their home markets to matter much elsewhere.

The heart of the crisis for journalism is that the breakdown of local print coverage undermines democracy at the community level from where societies are grounded, democracies are built, crime and justice resonate most, and corruption and inefficiency can take hold without checks. A lack of trusted local news that is weakening the media’s role as the fourth estate endangers liberal democracies and risks accelerating a tilt towards autocracy in many parts of the world. The best hope for journalism lies with its killers; digital platforms need content. But their global nature works against a comprehensive rescue.

Where would you like to start with valid criticisms of the media that shatter public trust? Its mistakes, sensationalism, biases, hypocrisy, herd mentality or lack of accountability? But at least traditional media had standards, respected copyright and didn’t create ‘echo chambers’ of the unacceptable filled by ‘fake news farms’. The decline in print subscriptions started with 24-hour news TV in the 1990s; the platforms are not the only destroyers. Government subsidies, as occurs in Europe, are one way to help local media. But that tends to reduce scrutiny of government. Tech moguls acquiring newspapers are another answer but they buy global, not local, titles and these purchases raise the question about how much power these titans can accumulate.[7] Foundations are providing support but there are not enough of them.[8] It needs to be emphasised that quality journalism won’t disappear. National publications – and perhaps print weekend editions – will survive in robust enough shape to scrutinise federal agencies. But who will report on local news? Some say Rupert Murdoch’s empire is the biggest threat to Australia’s democracy – former prime minister Kevin Rudd is one.[9] Presumably then, fewer News Corp. newspapers country-wide would benefit society.

Clearly not. Liberal democracies are fairer, less corrupt, more efficient and wealthier societies thanks to the benefits bestowed by quality print journalism grounded in local reporting. A world without a strong fourth estate will be a more troubled one.

Crumbling role

In 2018 amid efforts to fight ‘fake news’, Facebook said it would prioritise local news on user News Feeds (a shift that hurt media reliant on this feature for distribution).[10] A year later, however, Facebook abandoned plans to populate its ‘Today In’ app across the US because one in three Americans live where local news is lacking.[11]

These ‘news deserts’ are likely to expand. In the US, about 1,800 newspapers have closed over the past 15 years, over which time daily newspaper circulation has dropped by 42% to 29 million.[12] Many of the 7,100 survivors have reduced editions and reportage.[13] Many rural areas and poorer suburbs are without newspapers while many cities have only one paper. In the UK, local newspaper closures stand at a net loss of 245 since 2005 and surviving newspapers have lost up to 60% of their circulation.[14] The number of regional journalists has halved and nearly 60% of the UK receives no daily or regional title.[15]

In Australia, where print media share of advertising spending has more than halved from 28% in 2013 to 12% in 2017,[16] it’s a similar story of closures,[17] reduced coverage, falling circulation and dropping in worth of media assets.[18] Fairfax Media, for example, paid A$490 million in redundancies from 2007 to 2017 as it shed 3,209 full-time staff and 1,033 part-time and casual jobs.[19]

The collapse of local news has political and financial consequences for western democracies. One US study in 2018 found that the loss of local newspapers led to more partisan politics because national political coverage focuses on party conflict rather than policy.[20] Another US study the same year found newspaper closures boosted borrowing costs for local governments. “Negative coverage shock” led to government inefficiency and higher taxes and made it harder for lenders to evaluate projects.[21]

A UK study in 2016 found that towns without daily newspapers suffered a ‘democracy deficit’ of reduced community engagement and greater distrust of authorities.[22] Other studies show the cost of corruption, patronage and rent-seeking that thrive without scrutiny.[23]

The internet has, however, has helped a few publications because it meant they could go global. The Economist, the Financial Times, The New York Times, The Wall Street Journal and The Washington Post (and possibly The Guardian) have thrived as large home markets allowed them to invest in quality journalism and attract global subscriptions. The New York Times subscriptions, for example, swelled from 600,000 in 2012 to 3.5 million now.

But global publications overlook much, reduce the incentive for people to subscribe to local newspapers and have smothered new media. New online media, helped by new ways of storytelling, are yet to establish the credibility needed to replace legacy media’s civic role. The distribution of their output is too diffuse to direct news agendas and they are struggling financially anyway as they have struggled to attain the revenue they hoped for. Their money woes were highlighted in January when Verizon Media, the owner of HuffPost and other titles,[24] laid off 7% of staff, which followed mass redundancies in 2017, while BuzzFeed let go up to 15% of its workforce.[25]

The question is still open as to whether or not a durable digital media business model exists, even for most traditional mastheads. The Guardian in May said it had fulfilled a three-year plan to break even by relying on donations of one million readers[26] but only at the cost of 450 jobs.[27] A few news sites only survive because they are owned by wealthy individuals. The Atlantic, for example, is majority owned by Laurene Jobs, the widow of Steve.

Fighting back

The media’s challenge today is ever greater because the powerful seek to hasten its decline. Some leading democracies are weaponising media scepticism (‘enemies of the people’), discrediting its scrutiny (‘fake news’) and attacking press freedom.[28] Those atop autocracies are killing, jailing and holding hostage journalists at a record rate.[29]

What can be done to save journalism, local print especially? A Canadian-government-commissioned report in 2017 on helping journalism suggested 12 ways. These included removing tax anomalies hampering print, encouraging philanthropic financing, strengthening copyright laws for the digital world, creating a fund to support civic-function journalism, and a legal advisory service to help manage the risks of investigative reporting.[30] A UK government-commissioned report of the same ilk has nine recommendations including that tax relief and money be provided for “public interest” journalism.[31]

The US House Judiciary Committee in June embarked on an inquiry into how the Google and Facebook stranglehold on digital advertising is hurting local news groups.[32] The president and CEO of the News Media Alliance, a trade association representing about 2,000 US newspapers, told the committee “the very fabric of our civic society is at risk” and urged the passing of the Journalism and Competition and Protections Act of 2018[33] that would allow news groups to bargain collectively with the platforms.[34] 

A comparable investigation is the ‘Digital platforms inquiry’ by the Australian Competition and Consumer Commission. The journalist union submitted that platforms be classified as media organisations for regulatory purpose, that they be forced to compensate media for using content, and a ‘good faith’ requirement where relevant to help legacy media negotiate with platforms.[35]

The ACCC in December issued draft findings that said platforms threaten journalism and recommended greater oversight of the platforms (and algorithms) that send more than 50% of traffic to Australian news sites.[36] Facebook said such scrutiny is “unnecessary”, “unprecedented” and “unworkable”.[37] The ACCC’s report is due in June.

The blow to society from the loss of quality journalism makes the case for government intervention, as the UK inquiry suggested. Many ways are being debated[38] or attempted. The EU in March, for instance, passed copyright laws to protect content. Last year, the Canadian government pledged C$50 million to a fund that supports local journalism.[39] Initial questions that need answering are which news organisations should be helped. However the money is directed, though, an overarching problem is that such aid tends to quell media scrutiny of government. The French government each year pays hundreds of millions of euros to subsidise newspapers that are renowned for being submissive to the state.

Perhaps the worst way for a government to respond would be to create a public broadcaster that competed nationwide against privately owned print, radio and TV. Yet that is the challenge posed by the Australian Broadcasting Corporation. While the ABC fulfils functions private media can’t profitably, media companies have criticised the ABC’s spread into digital because it reduces demand for their paywalled content.[40] In the UK, the newspaper trade body has raised the concerns about the British Broadcasting Corporation’s news websites,[41] as did the UK inquiry even though it was outside its remit.[42] The danger for Australia is the ABC becomes so powerful in a devastated media environment that an unscrupulous government turns an arm of the state into a tool of the executive, as public broadcasters are in some liberal democracies.

One hope for the media is that the tech companies need content. This self-interest might explain why Facebook has launched the Facebook Journalism Project to invest in journalism.[43] In another recognition of the need to nurture content, Apple has launched the subscription-based Apple News+ to direct revenue to publishers based on views. In the US, Apple News+ charges US$9.99 a month for access to about 300 publications.[44] The disadvantages for traditional media include that Apple takes a 50% cut. Another is that publishers could cannibalise paywalled subscription.[45] A third drawback is that Apple News+ does little, if anything, to help local papers.

The Globe and Mail of Canada makes some content available for no charge on Apple News+ but it has not joined the service. People must pay to read its latest on the Trudeau scandal and whatever other scoops this and other quality papers can still break as they struggle to make a future for themselves in the digital age.[46]     

By Michael Collins, Investment Specialist

[1] The Globe and Mail. ‘PMO pressed Wilson-Raybould to abandon prosecution of SNC-Lavalin: Trudeau denies his office ‘directed’ her.’ 7 February 2019. (The article is behind a paywall.) 

[2] The year 2014 marked the ‘seismic shift’ when global advertising revenue dropped below that of subscriptions. WARC, part of UK-based global specialist information company Ascential. ‘Ads no longer subsidise news.’ 2 June 2015.

[3] Pew Research Center. ‘Newsroom employment dropped nearly a quarter in less than 10 years with greatest decline in newspapers.’ 30 July 2018.

[4] UNC. School of Media and Journalism. Center for Innovation and Sustainability in Local Media. ‘The expanding news desert.’

[5] See UK government-commissioned report. ‘The Cairncross Review: A sustainable future for journalism.’ Chapter 2. 12 February 2019.

[6] See UNESCO series on internet freedom. ‘Protecting journalism sources in the digital age.’ 2017. Found on the website of the International Federation of Journalists.

[7] Amazon CEO Jeff Bezos, for example, owns The Washington Post while Salesforce co-founder Marc Benioff and his wife Lynne have bought Time magazine

[8] In Australia, for instance, philanthropist Judith Neilson committed A$100 million to fund the Judith Neilson Institute for Journalism & Ideas. See

[9] Kevin Rudd, former prime minister of Australia. ‘Cancer eating at the heart of Australian democracy.’ Opinion article in The Sydney Morning Herald. 27 August 2018. In the article, he calls “Rupert Murdoch - the greatest cancer on the Australian democracy”.

[10] Post by Mark Zuckerberg. Found within article on Facebook Newsroom. ‘More local news on Facebook.’ 29 January 2018. 

[11] Facebook Journalism Project. ‘Supporting research on news deserts.’ 18 March 2019.

[12] UNC. Op. cit.

[13] The decline of print in the US has been hastened by hedge funds that buy and gut newspapers and turn them into ‘zombie papers’. See the Financial Times. ‘Media: US ‘ghost newspapers’ struggle for life.’ 25 February 2019. Of special concern of late is that Alden Global Capital has bid for Gannett, the largest newspaper publisher in the US.

[14] PressGazette. ‘UK local newspaper closures: Net loss of 245 titles since 2005, new Press Gazette research.’ 11 February 2019.

[15] BBC. ‘The death of the local newspaper?’ 20 February 2018.

[16] Australian government’s Australian Communications and Media Authority. ‘Communications report 17/18’. Page 45. Google’s revenue of A$4.3 billion in 2018, overshadowed Fairfax’s peak revenue in 2008 of A$2.9 billion and was nearly treble now-Nine-owned company’s revenue of A$1.7 billion last year. See Crikey. Google Australia is unprecedented in how it will impact tax and media.’ 3 May 2019.

[17] Nine in February closed two of its Queensland newsrooms (Toowoomba and Mackay), to cite just one recent example.

[18] Nine, for instance, in April sold the old Rural Press of 170 regional newspapers that include The Canberra Times and The Newcastle Herald for A$125 million (including A$10 million in advertising space) – and half that value was the properties owned by Australian Community Media – which Fairfax Media had purchased for A$2.8 billion in 2007. See The Sydney Morning Herald. ‘Antony Catalano buys Nine’s regional newspapers for $125m.’ 30 April 2019. In February, Southern Cross Austereo, which owns 85 radio stations and 86 free-to-air regional TV signals, reduced the intangible valuation of its regional TV assets by A$227 million to zero. Southern Cross Austereo. ‘H! FY19 investor presentation.’ 21 February 2019.

[19] News Corp. incurred $900 million in ‘restructuring costs’ as it eradicated 1,400 positions over that time, mainly in Australia and the UK. Media, Entertainment and Arts Alliance. ‘Media, Entertainment and Arts Alliance submission to the Australian Competition and Consumer Commission’s Digital Platforms Inquiry.’ April 2018. Page 3.

[20] The study found that ‘split ticket’ voting – voting for different parties at the same election – dropped by 1.9% after local newspapers closed. Joshua P Darr, Matthew P Hitt and Johanna L Dunaway. ‘Newspaper closures polarise voting behaviour.’ Journal of Communication, Volume 68, Issue 6, December 22018, Page 1007 – 1028. 10 An abstract can be found at A summary can be found in The Conversation. ‘When newspapers close, voters become more partisan.’ 11 February 2019.

[21] Pengjie Gao, University of Notre Dame, and Chang Lee and Dermot Murphy of the University of Illinois at Chicago. ‘Financing dies in darkness? The impact of newspaper closures on public finance.’ 11 July 2018. A summary can be found at ‘When newspapers close, the cost of government goes up.’ 25 July 2018.

[22] Gordon Ramsay and Martin Moore. Centre for the Study of Media, Communication and Power. King’s College London. ‘Monopolising local news: Is there an emerging democratic deficit in the UK due to the decline of local newspapers?’ May 2016.

[23] See Kevin M Murphy, Andrei Shleifer and Robert W Vishny. 1993. ‘Why is rent-seeking so costly to growth?’ American Economic Review. Papers and Proceedings 83 (2): 409-414.

[24] Huffington Post. ‘Layoffs hit HuffPost after $4.6 billion Verizon Media write-down.’ 24 January 2019.

[25] The Wall Street Journal. ‘BuzzFeed to cut 15% of its workforce.’ 23 January 2019.

[26] Katharine Viner, editor-in-chief of The Guardian. ‘The Guardian breaks even against the odds: we couldn’t have done this without you.’ 1 May 2019.

[27] PressGazette. ‘Guardian performs remarkable comeback, but at cost of 450 jobs.’ 1 May 2019.

[28] Japan, to give one example, passed a state secrets law in 2013 that gives officials the right to decide what is a secret. See The New York Times editorial ‘Japan’s dangerous anachronism.’ 16 December 2013. The US decision to charge WikiLeaks founder Julian Assange under the 1917 Espionage Act can be seen as an attack to curb the standard practice of printing leaked government documents. For one opinion along this vein, see the view of The Editorial Board of The New York Times on 23 May 2019. ‘Julian Assange’s indictment aims at the heart of the first amendment.’

[29] Reporters Without Borders. ‘Worldwide round-up of journalists killed, detained, held hostage or missing in 2018.’

[30] Public Policy Forum. ‘The shattered mirror. News, democracy and trust in the digital age.’ January 2017.

[31] The Cairncross Review. Op cit. Page 11.

[32] US House Committee on the Judiciary. ‘Online platforms and market power, part 1: The free and diverse press.’ Scheduled to commence on 11 June 2019.

[33] H.R.5190 - Journalism and Competition and Protections Act of 2018. Introduced 7 March 2018.

[34] ‘Testimony of David Chavern, president and CEO of News Media Alliance.‘ 11 June 2019. Testimony to the Committee on the Judiciary Subcommittee on Antitrust, Commercial and Administrative Law US House of Representatives.

[35] Media, Entertainment and Arts Alliance. Op cit.

[36] Australian Competition and Consumer Commission. Digital platforms inquiry. Preliminary report.’ December 2018.

[37] The Sydney Morning Herald. “Unworkable, unnecessary, unprecedented’: Facebook hits back at ACCC.’ 13 December 2018.

[38] See The Atlantic. ‘How to save the news media.’ 1 April 2019.

[39] For a review of whether or not the money will help, see Columbia Journalism Review. ‘Canada pledges $50 million to local journalism. Will it help?’ 28 February 2018.

[40] See The Sydney Morning Herald. ‘Fairfax Media boss Greg Hywood accuses ABC of threatening future of commercial rivals.’ 17 May 2017.

[41] BBC. Op cit.

[42] The Cairncross Review. Op cit. See recommendation 5. Page 10. “Although the Review was not asked to comment on the BBC, it recommends that Ofcom should assess whether BBC News Online is striking the right balance between aiming for the widest reach for its own content on the one hand, and driving traffic from its online site to commercial publishers (particularly local ones) on the other.”

[43] See

[44] See

[45] The New York Times and The Washington Post have not joined Apple News+ (and Nine said it won’t when the service comes to Australia) though The Wall Street Journal has.

[46] The Globe and Mail. ‘Apple News+ promises digital audiences for struggling publishers but at what cost. 26 March 2019.

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